Risk mood improves ahead of high-tier data releases

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  • November 29, 2022

Here is what you need to know on Tuesday, November 29:

Following Monday’s risk-off action, the market mood seems to have improved early Tuesday with major Asian equity indices registering impressive daily gains. The US Dollar Index, which rose more than 0.5% on Monday, turned south with the US Dollar struggling to find demand as a safe haven. European Commission will release the business and consumer sentiment surveys later in the session. Germany’s Destatis will publish the November inflation figures and the US economic docket will feature September Housing Price Index data alongside the Conference Board’s Consumer Confidence Index. Third-quarter Gross Domestic Product (GDP) data from Canada will also be looked upon for fresh impetus.

China’s securities regulator announced that it will allow real-estate developers to access refinancing. “The fresh move, adding to a flurry of recent government actions to stabilize the housing market and the economy at large, is meant to let listed developers use the capital market to ease their funding woes,” Global Times reported. Following this development, the Shanghai Composite remain on track to end the day more than 2% higher and Hong Kong’s Hang Seng gains nearly 4%.

Additionally, Global Times commentator Hu Xijin tweeted out “China may walk out of the shadow of COVID-19 sooner than expected,” providing an additional boost to risk sentiment. Reflecting the improving market mood, US stock index futures are up between 0.2% and 0.5% in the early European morning.

EUR/USD gained its traction after having closed in negative territory on Monday and was last seen edging higher toward 1.0400. While testifying before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament on Monday, European Central Bank (ECB) President Christine Lagarde reiterated that interest rates will remain their main tool for fighting inflation. Commenting on the economic outlook, Lagarde noted that growth in the Eurozone was expected to continue to weaken for the remainder of this year and the beginning of 2023.

GBP/USD dropped below 1.1950 late Monday but reversed its direction early Tuesday. At the time of press, the pair was trading in positive territory at around 1.2000. Bank of England (BOE) Governor Andrew Bailey is scheduled to deliver a speech at 1800 GMT.

USD/JPY touched its lowest level since late August at 137.50 on Monday as the Japanese Yen capitalized on safe-haven flows. With the US Dollar staying on the back foot early Tuesday, the pair is having a hard time staging a rebound.  Reuters reported on Tuesday that 24 of 26 economists that were polled recently said that they were expecting the Bank of Japan’s next policy to be “unwinding its ultra-easy monetary policy.”

New from China helped Gold price gather bullish momentum and XAU/USD already erased all losses it suffered on Monday. The pair was last seen rising 0.7% on the day at $1,755. The benchmark 10-year US Treasury bond yield stays quiet below 3.7%, allowing the risk perception to drive XAU/USD’s action.

Falling crude oil prices weighed on the Canadian Dollar on Monday and USD/CAD climbed to its highest level in nearly three weeks at 1.3505. With the barrel of West Texas Intermediate gaining nearly 3% early Tuesday, USD/CAD stays under bearish pressure and trades deep in negative territory at around 1.3430. The Canadian economy is forecast to grow at an annualized rate of 3.5% in the third quarter, up slightly from 3.3% recorded in the second quarter.

Bitcoin started to edge higher and was last seen gaining 1.5% on the day at $16,450 after having closed the previous four trading days in negative territory. Supported by the upbeat market mood, Ethereum is up 3% on the day, trading slightly above $1,200.